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Banks can deliver mobile banking in three basic ways:
- Through a phone's Web browser. Nearly all cell phones sold these days come with a browser, and the browser's WAP 2.0 security is pretty good, Egan said. But unless you have a phone with a keyboard, mobile banking is a bit cumbersome. Also, data charges on a cell phone can add up fast. If you don't already have one, you'll need to buy a data plan, which typically adds $30 or more to your monthly bill.
- Through a bank-specific application. This is something that's either already part of the phone you buy (preloaded) or that you get from your bank's Web site (downloadable). Again, you'll need a data plan. The download process can be difficult for a novice to navigate, although once enabled, accessing your bank is easier and faster than with a browser-based version.
- Via text messaging. Even old phones without browsers can send and receive texts, so this widens the potential banking audience considerably. But text messages typically aren't encrypted, and the functions you can perform are limited. Instead of one session, you might have a lot of back-and-forth texting to get the information you need.
In banking circles, preloaded or downloadable applications are considered the "sexiest" technology, Celent's Gillen said, with a better user interface and more possibilities for future expansion of banking services (I'll talk about that in a bit). But most banks, he said, will eventually employ a combination of all three technologies.
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Banks want you to sign up for a number of reasons:- To reduce costs. Banks hope to reduce calls to customer-service representatives for basic account information, like checking balances. The savings can be dramatic: While a chat with a phone rep costs the bank about $1 per minute, Gillen said, a one-way text costs just 3 cents.
- To improve fraud prevention. Mobile banking can allow banks to quickly notify customers of potentially fraudulent transactions and get a customer's OK before proceeding. Contacting customers via text or e-mail is cheaper than using call centers, and response times may be faster than when banks call a customer's land line.
- To trap you more firmly in their web of services. With the onset of electronic banking services, banks realized something interesting: The more technological services a customer adopts, the more likely he or she is to stay with the bank. If you use direct deposit, automatic debit and/or online bill payment, you understand this intuitively: It would be a major hassle to change banks. Adding mobile banking improves such "stickiness."
- To boost fee income down the line. Banks typically don't charge for mobile-banking access, but they hope to get a slice of the next step in mobile banking -- using your cell to make purchases.
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Citibank is already experimenting with mobile payments. In one trial, the bank has partnered with MasterCard, AT&T and Nokia to put chips in Nokia phones that allow customers to make debit and credit card purchases by waving the phone at special point-of-sale devices at certain stores. In another pilot, Citi has partnered with Obopay to allow customers to send and receive money using any mobile phone.
That sounds pretty cool, but banks will still need to reassure customers that such transactions are safe. When Javelin polled consumers about whether they might try mobile banking, fully one-third said it sounded "too risky." Seven out of 10 worried that their personal information could be more easily obtained if their phone were lost or stolen, while 62% worried that their account could be compromised by hackers, spyware and viruses.
Continued: Why there's not much risk . . . yet
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